Eurasian Integration through OBOR: Implication for Russia

The national flags of China and Russia seen outside the China National Convention Center during the opening ceremony of the One Belt, One Road international forum

In the past decade, both Russia and China have launched some regional projects that are promoted as a means to strengthen linkages with neighboring states. The Eurasian Economic Union (EEU) joins member states in an integrated single market providing the free movement of goods, capital, services, and labor. China's ‘One Belt, One Road’ (OBOR) is composed of two parallel projects, one maritime and one over land. These two ventures focus on the construction of large-scale infrastructure endeavors, financed by the newly established Asia Infrastructure Investment Bank. On the one hand, I try to evaluate and compare Russian and Chinese narratives on the EEU and OBOR as well as to examine the status of their decision, initiated in May 2015, to link the two projects. On the other hand, I am also concerned to locate this development in the context of Russia and China’s extended foreign policy goals, and its implications for the Russian–Chinese relationship.

To connect Asia and Europe from the Atlantic to the Pacific through land has long been a dream. The two continents have made many attempts over the past one hundred years. In the 19th century, for example, Russia built the Trans-Siberian Railway, successfully connecting the Baltic Sea to the Pacific, which is known as the northern line. However, that railway was more for security purposes and brought little economic benefits. The second railway effort is known as the Eurasian Bridge that runs through the center of the region. In 1990, China extended a railway through the extreme end of the Xinjiang Autonomous Region to Kazakhstan, which enabled a connection from Lianyungang port on China’s Pacific coast to European networks all the way to Rotterdam.

Eurasia, as a contiguous continent stretching from the west of Europe to the eastern coast of China, is rapidly being drawn together into a massive market covering over 60 countries, 60% of the world’s population, 75% of energy resources, and 30% of GDP. Many plans have been brought forth by multiple regional players to guide this endeavor — the most dynamic of which is China’s multi-trillion dollar Belt and Road initiative — but the end goal of them all is the same: to create “win-win” solutions where all parties benefit by pursuing the similar goal of infrastructural development and economic integration.

Unfortunately, on the other way, unique nature of Eurasia’s geography has to do with the unprecedented distance of Eurasia’s Hinterland (inward) regions from the sea coast and accordingly from international markets. This problem is particularly acute for landlocked economies without access to the sea and the main negative factor for continental countries as compared to coastal regions is their higher transportation costs, as land transportation turns out to be much costlier than maritime transport. In sum, the importance of connectivity in Eurasia is due to the significant limitations of the region’s landlocked economies in gaining access to international markets due to high transportation costs. In this regard OBOR serves to assist such economies in surmounting transportation and logistical bottlenecks and improves their export capacity, all of which creates the conditions for attaining the UN development goals for the region’s economies. In other words, the OBOR project through providing connectivity to the countries that most need it goes a long way to rendering economic integration more equal and inclusive. OBOR is really two plans combined to form a larger framework of new trade routes. The first of these is One Belt, which refers to the development of new infrastructure, particularly railroads and highways, to connect China’s interior provinces with Europe by way of Russia, Central Asia and the Middle East.

Russia virtually stretches from one side of Eurasia to the other, and its participation in the New Silk Road initiative is imperative for its success. While Russia never really came out in outright opposition to the movement, and its Eurasian Customs Union was essential for the rise of trans-Eurasian rail transport, it initially viewed China’s involvement in Central Asia as an intrusion into its backyard. But this position has started changing as Russia’s might as a regional powerhouse has been decimated by low oil prices and U.S./EU sanctions over the Ukraine conflict. Effectively, these dire economic pressures have pushed the country into finding other means of sustenance, and its gaze inevitably fell eastward to China. Joint economic projects between China and Russia have been on the rise ever since. These include less resistance to Belt and Road endeavors, more investment from and trade with China, and increased cooperation in industries such as aerospace, science, and finance. China recently created the plans for the impending Moscow to Kazan high-speed rail line, and then offered a $6 billion loan to help build it along with a proposal to extend it all the way to Beijing. Other Russo-Sino partnerships include efforts to trade in their own currencies rather than in dollars and Russia using China's Unionpay electronic payment network rather than Plus or Cirrus.

Moscow still dominates the security of the region, with military bases in Kyrgyzstan and Tajikistan. Yet, Russia’s cultural links, and its security, economic and political levers, still make it the key player in the region. Russia has come to view Eurasia as an important sphere of influence in Moscow’s drive to recover a regional and global role. The emphasis on ‘Eurasianism’ provides a vague philosophical framework for a new Russia identity that is shifting away from Europe and the West. The Eurasian Economic Union (EEU), launched in 2015, embodies this Eurasianist idea. Russia saw itself as offering unique advantages to the countries of the Asian-Pacific region: it had friendly relations with all the powers of the region, and could offer a security shield to them as it participated more fully in the region’s development. In its simplest form, Russia’s Eurasian concept supposes a partnership of Chinese economic power with Russian military power. For it to be realized, however, this prospect would have to serve China’s interests. Little in China’s rhetoric or actions, however, suggests that China views OBOR as a stepping stone toward a greater Eurasian bloc or a two-power condominium in Eurasia. Putin's contribution is as follows: he brought the Eurasian Economic Union (EAEU) on board and outlined the goal of establishing a single space of cooperation across Eurasia," the analyst explained. In other words, "Russia said that the world cannot and will not operate according to the conditions and principles that Western countries consider to be a norm. For its part, China has started showing how exactly the world can and wants to function."

The optimists’ view, however, is that China’s moves to expand trade and investment westward complement Russia’s efforts to develop the Eurasian Economic Union and the Shanghai Cooperation Organization. Together, these trends hold the potential for the formation of a powerful new Eurasian bloc. As Karaganov puts it, Russia’s role is to be “a bridge between a rising Asia, and China, and a declining but still rich and culturally-close Europe. Of course, a ‘bridge’ that is not only logistical, but also industrial, technological, cultural.” Russia can demonstrate that it is “a first-class great power of the 21st century” and “the main guarantor of its security and of international peace in general.” The Eurasian bloc will consist of Central Asia, Iran, India, Pakistan, and South Korea, as well as Russia and China.

The important point is that in dealing with the challenges faced by landlocked economies in Eurasia, the OBOR and the Eurasian Economic Union projects complement and reinforce each other – a stronger Eurasian Union becomes more competitive as the main connecting line between Europe and Asia, while on the other hand the advancement of the OBOR project reinforces the connectivity and integration amongst the member countries of the Eurasian Economic Union. In the end, it is through regional economic integration that developing landlocked countries in Eurasia can transform geography from what is perceived as a handicap into strength as greater integration allows Eurasian countries to be more competitive in intermediating the flow of investment and trade between the East and the West in such integration projects as the One belt-One road project or the Eurasian Economic Union.

Saadat Hassan, PhD scholar at School of Politics and International Relations, Quaid-i-Azam University, in Islamabad, is the expert on South Asia affairs. Contact him via: qaura1@gmail.com